Investment Companies

June 4, 2020

On May 27, 2020, in a letter addressed to the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA), the SEC staff (Staff) provided no-action relief (ICI/SIFMA Letter) to address 1940 Act considerations for funds seeking to participate in the Federal Reserve Board’s (Fed) Term Asset-Backed…

June 2, 2020

Recently, the CFTC issued a customer advisory (Advisory) in response to increased investor interest in exchange-traded products (ETPs) and funds that invest in futures or other types of commodity interests (collectively, Pools). The Advisory highlights the distinctions between ETPs and funds that invest in securities and Pools, which include the…

June 2, 2020

On May 27, 2020, the SEC staff (Staff) issued a statement (Statement) withdrawing a prior no-action letter (Boulder Total Return Fund, SEC No-Action Letter (Nov. 15, 2010) (Boulder)) addressing certain aspects of the intersection of the voting requirements of Section 18(i) of the 1940 Act and state control share acquisition…

May 15, 2020

On May 13, 2020, a group of six ETF sponsors submitted letters to Cboe Global Markets, Inc., NASDAQ, and Intercontinental Exchange Inc. (the parent of NYSE Arca) urging that each exchange adopt exchange listing rules or other means to categorize exchange-traded products (ETPs) differently (ETP Letter). The ETP Letter proposes…

May 4, 2020

On April 28, 2020, the SEC fined a fund’s adviser in a consent order (Order) for the adviser’s conduct involving the fund’s overvaluation of its securities and the adviser’s misleading statements about the fund’s performance in shareholder communications. The fund primarily invested in non-agency mortgage-backed securities (NA MBS) and, during…

April 24, 2020

On April 21, 2020, the SEC proposed Rule 2a-5 under the 1940 Act (Rule) that specifies what is required for a fund (or a business development company) to determine the fair value in good faith of the fund’s investments that do not have readily available market quotations for purposes of Section 2(a)(41) of the 1940 Act and Rule 2a-4 under the 1940 Act.

April 16, 2020

On April 14, 2020, the SEC’s Division of Investment Management (Division) issued a statement to underscore the importance of delivering required information to investment company investors on a timely basis (Statement). The Statement emphasizes that investment companies are subject to Section 10(a)(3) of the 1933 Act, which requires any prospectus used…

April 16, 2020

The SEC’s Division of Investment Management (Division) recently issued an Information Update (Update) regarding changes to the SEC’s procedures for granting exemptive applications filed under the 1940 Act or the Advisers Act. Before issuing an exemptive order, the SEC provides a public notice summarizing the exemptive relief that will be…

April 1, 2020

On March 26, 2020, the SEC staff (Staff) issued a no-action letter to the Investment Company Institute (ICI Letter) that provides temporary relief to registered open-end investment companies, other than exchange-traded funds and money market funds (open-end funds), and affiliated persons of such open-end funds (and affiliated persons of such affiliated persons) (Affiliates) from certain restrictions in Section 17(a) of the 1940 Act. Subject to conditions that are specified in the ICI Letter, the Staff will permit Affiliates to rely on Rule 17a-9 to purchase an affiliated open-end fund’s debt securities to enhance such fund’s liquidity or to fund shareholder redemptions in light of the short-term dislocation in the fixed income markets caused by the outbreak of COVID-19.

March 26, 2020

On March 23, 2020, the SEC issued an order (1940 Act Borrowing Order) providing for temporary additional borrowing flexibility to certain registered investment companies (funds) affected by the outbreak of COVID-19 (Coronavirus). The 1940 Act Borrowing Order provides exemptions from certain requirements of the Investment Company Act of 1940 (1940…